Czech Mate

In the eight years Frederick Frank has spent traveling between Pittsburgh and Slovakia, he has seen some major changes. “You only need look at Bratislava,” he says. “It was always a beautiful city, but now it has all the amenities of a strong multinational economy.” Frank, a partner at the Pittsburgh firm Frank, Bails, Murcko, Gubinsky & Gale, is partly responsible for the city’s transformation. 

In 1999, President Clinton nominated Frank to be one of three directors of the Czech-Slovak American Enterprise Fund (CSAEF), which was authorized by Congress through the Support for East European Democracy Act of 1989. Frank’s background made him an ideal selection. For 20 years he was solicitor to the county treasurer of Allegheny County, was experienced in determining the valuation of closely held corporations and held many leadership positions in the nonprofit sector. He’d also traveled a great deal—to 51 countries and six continents (all except Antarctica) to date—for both work and pleasure. “I felt that this was a unique opportunity to build a bilateral relation between another country and the United States,” he says. “Helping to build a strong economy there was a way of giving back to this country.”

The young, newly independent countries were volatile. After being under Communist rule for 41 years, Slovakia became its own nation state after splitting from the Czech Republic in 1993. The CSAEF helped families whose companies had been seized by the former government. “When the companies are running on their own, we’re accomplishing our goal,” Frank says.

The CSAEF invested in industry. Slovakia has a tremendous natural resource in its forests, but some of its factories had been shut down. The fund took over one factory in a town high in the mountains and hired and trained a management team. “Getting the factory going had a positive domino effect on the city,” Frank says, noting that a catering business received a boon when factory management contracted with the company to provide hot lunches to the employees. 

Another successful venture was a start-up called Profesia, the Slovak version of Monster.com. The fund took an equity position in the company, which, after a strategic investor came in, returned more than five times the initial investment. “There is a growing professional class with a lot of technical expertise and wonderful ideas, but they don’t have the capital to get them going,” Frank says.

In the past five years, the Slovak government has created a favorable climate for foreign investors. It instituted an across-the-board 19 percent flat tax in 2004, extremely low for the region, and increased transparency in legal and business dealings. Multinational companies such as Motorola and Coca-Cola, and automobile manufacturers including Volkswagen, Kia and Peugeot have come in and built factories and subsidiaries. 

For many years, the CSAEF was no longer the largest venture capital fund in the country. The currency has grown stronger—in 1999, a dollar bought 42 crowns; today it buys 25. “The Slovaks are hardworking, bright and really want to see their country grow,” Frank says. “And they’re nice people. In all the dozens of trips I’ve made there, I’ve never had anything but a warm reception. It’s really been a unique experience.”

In 2006, U.S. Ambassador to Slovakia Rodolphe Vallee awarded Frank the President’s Call to Service Award at a ceremony in Bratislava. “I was very proud that we were recognized,” he says. “America’s been a haven for many people. For all of its faults, it’s the most generous country on earth, and I think that’s a message that should be spread throughout the world.”